HELOC Application Checklist: What You Need to Apply

Navigating the Cost of Home Equity: A Guide to HELOC and Home Equity Loan Fees

Tapping into your home’s equity is a powerful way to fund major life goals, but a common question remains: What will it actually cost me to get the loan? While home equity transactions are often simpler than a new home purchase, there are still essential closing costs and lender fees you need to account for.

In a recent “Home School” session, the experts at loanDepot broke down the fee structures for both a Home Equity Line of Credit (HELOC) and a Home Equity Loan (HELoan) to help you budget with confidence.

Main Takeaways

• Fees Vary by Product: The costs you pay are significantly different depending on whether you choose a line of credit or a fixed-rate loan.
• HELOCs Keep it Simple: Because a HELOC functions like a credit card, it typically features only one primary cost: the origination fee.
• HELoans Mimic Mortgages: Since a HELoan is a lump-sum product, its fee structure looks more like a traditional mortgage, including credit and property reports.
• Mandatory Government Fees: Regardless of the product, you must account for the government recording fee to make the loan official.
• Expert Support: Partnering with a transparent lender ensures you understand every line item before you sign.

Understanding HELOC Costs: The Origination Fee

If you choose a Home Equity Line of Credit (HELOC), you are opening a flexible revolving line of credit. At loanDepot, this process is streamlined into one primary expense: the origination fee.

This is the fee paid to the lender for the work involved in setting up and “doing” the loan. Typically, this is calculated as a percentage of the total credit line you are borrowing. Its simplicity makes the HELOC an attractive option for those who want a lower-fee entry into their home equity.

Breaking Down Home Equity Loan (HELoan) Fees

A Home Equity Loan (HELoan) is a more traditional installment loan. Because it is structured more like a standard mortgage, it involves a few more specific administrative and third-party fees:

1. Lender Fee: This is a consistent, flat fee charged by the lender for every transaction.
2. Credit Report Fee: To ensure you meet the necessary credit standards, a fee is required to pull your official credit history.
3. Property Condition Report: Unlike a full appraisal, this is a general overview of your home’s current state to ensure the collateral is sound.
4. Government Recording Fee: This is the price paid to local government authorities to legally record the new loan against your property title.

Transparency is Key

Whether you are pursuing a new purchase, a HELOC, or a HELoan, there will always be costs associated with the transaction. The goal isn’t necessarily to find a “zero fee” loan, but to find a lender who provides clear, predictable pricing so there are no surprises at the closing table.

Take the Next Step with loanDepot

The experts at loanDepot believe that mortgage education is the best way to empower homeowners. By understanding the “why” behind every fee, you can make the best financial decision for your unique situation.

Ready to see your specific numbers?

• Watch the Lesson: See the full fee breakdown in the video above.
• Get a Personalized Fee Quote: Every borrower and property is different. Contact a loanDepot specialist today for a detailed estimate of the fees and costs for your specific equity project.